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Maintaining a balanced budget for the next ten years is the real public finance challenge

Montreal, February 11, 2015 – Given that the government is grappling with a structural deficit, the real challenge for Quebec is not so much reducing the deficit to zero next year but rather preserving this balance over the long term. This is the opinion expressed by two representatives of the Montreal Economic Institute in a submission presented today before the Committee on Public Finance that is studying Bill 28.

Quebec is on the right track to return to budgetary balance, more than five years after the recession. “We have to highlight the good performance of the government, which seems to be managing to control its spending,” observes Youri Chassin, coauthor of the submission. “Yet spending is still increasing overall, so we’re not really talking about austerity.”

Beyond the next year, it is long-term savings that the government must try to find. “Not the way it was done in the past by rationing services and making people wait in line for access to hospitals or daycares,” cautions Jasmin Guénette, Vice President of the MEI. “We need to do things differently, which does not always mean short-term savings, but which changes the long-term dynamic.”

The research carried out in recent years by the MEI has illustrated several promising avenues. Some examples were presented to parliamentarians:

  • Police services could be improved if peripheral duties were delegated to less specialized personnel while police officers concentrated on their essential duties, as is done in England;
  • Duplicate health insurance would increase the resources devoted to health care without raising the level of public financing. In Denmark, results were positive for the public system and for low-income people;
  • Schools should be more autonomous, which would encourage diversity in pedagogical models, and ultimately student achievement. More autonomous public schools could also decide to evaluate their teachers. Sweden, the United States and Alberta all have autonomous public schools.

“If government spending had increased at the same rate as economic growth over the past ten years, we would have a $15-billion surplus. It would be very unfortunate if we ignored the lessons of the past and found ourselves before another parliamentary committee ten years down the road having the same debate all over again,” concludes Youri Chassin.

The submission presented to parliamentarians, entitled “Faire les choses autrement pour maintenir l’équilibre budgétaire à long terme” was prepared by Michel Kelly-Gagnon, President and CEO of the MEI, and Youri Chassin, Economist and Research Director. Jasmin Guénette, Vice President of the MEI, participated in its presentation. The document is available on our website (French only).

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The Montreal Economic Institute is an independent, non-partisan, not-for-profit research and educational organization. Through its studies and its conferences, the MEI stimulates debate on public policies in Quebec and across Canada by proposing wealth-creating reforms based on market mechanisms.

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Interview requests: Mariam Diaby, Communications Director, MEI / Tel.: 514-273-0969 ext. 2231 / Cell.: 514-668-3063 / Email: mdiaby@iedm.org

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